Can Babcock Wilcox Change The Game With The Modular Nuclear Reactor?

By Simit Patel

One of the many reasons I'm so excited and so bullish on the nuclear industry is that we are seeing a cycle of innovation - something akin to the industry lifecycle - playing out in the nuclear sector (NUCL). I believe we are in the early stages of the innovation phase, and are going to see many innovations in nuclear technology that enable the industry as a whole to meet the challenge created by a world demanding more scalable, cost-effective power without fossil fuels. For investors, I believe this will create an abundance of opportunities.

One of the opportunities I'm most excited about - in addition to breeder reactors and uranium sea mining, which I discussed previously - are modular nuclear reactors. These devices have the ultimate effect of making nuclear power feasible on a smaller scale. They have lower upfront costs, and thus have the potential to reach customer segments that were previously locked out of the market due to the high upfront costs required in building a conventional nuclear power plant. Any innovation that enables price reduction so that a new class of customers can participate is a low-end or new market disruption - an opportunity that, if it gains sufficient traction and an innovation cycle of its own, can be the foundation for a much larger transformation in the entire industry. The pioneering writings of Dr. Clayton Christensen are essential reading for those looking to understand how cost-savings innovations transform markets and create outstanding investment opportunities.

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